Hedge Funds Never Been Less Bullish On City Holding Company (CHCO)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of City Holding Company (NASDAQ:CHCO).

City Holding Company (NASDAQ:CHCO) was in 6 hedge funds’ portfolios at the end of March. CHCO investors should be aware of a decrease in hedge fund sentiment recently. There were 13 hedge funds in our database with CHCO positions at the end of the previous quarter. Our calculations also showed that CHCO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Jim Simons Founder of Renaissance Technologies

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the latest hedge fund action surrounding City Holding Company (NASDAQ:CHCO).

How have hedgies been trading City Holding Company (NASDAQ:CHCO)?

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -54% from the previous quarter. The graph below displays the number of hedge funds with bullish position in CHCO over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Royce & Associates held the most valuable stake in City Holding Company (NASDAQ:CHCO), which was worth $14.3 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $1.7 million worth of shares. Renaissance Technologies, Winton Capital Management, and Polaris Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to City Holding Company (NASDAQ:CHCO), around 0.2% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to CHCO.

Because City Holding Company (NASDAQ:CHCO) has witnessed bearish sentiment from hedge fund managers, logic holds that there were a few hedgies that elected to cut their entire stakes last quarter. Intriguingly, Minhua Zhang’s Weld Capital Management cut the largest stake of the 750 funds tracked by Insider Monkey, worth close to $0.6 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dumped its stock, about $0.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 7 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as City Holding Company (NASDAQ:CHCO) but similarly valued. We will take a look at So-Young International Inc. (NASDAQ:SY), Super Micro Computer, Inc. (NASDAQ:SMCI), Allegheny Technologies Incorporated (NYSE:ATI), and Acadia Realty Trust (NYSE:AKR). This group of stocks’ market values are closest to CHCO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SY 6 38355 -1
SMCI 24 432701 22
ATI 26 94777 -1
AKR 14 31992 1
Average 17.5 149456 5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $149 million. That figure was $18 million in CHCO’s case. Allegheny Technologies Incorporated (NYSE:ATI) is the most popular stock in this table. On the other hand So-Young International Inc. (NASDAQ:SY) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks City Holding Company (NASDAQ:CHCO) is even less popular than SY. Hedge funds dodged a bullet by taking a bearish stance towards CHCO. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately CHCO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); CHCO investors were disappointed as the stock returned -1.3% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.